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EXCLUSIVE: £8B Swiss Manager Backs New Hotel Investment Company From Ex Malkin And EQT Duo

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A major Swiss-based fund manager has backed the creation of a new hotel investment company looking to buy assets and create a European brand aimed at cash-conscious but cool younger travellers.

Swiss Finance & Property, with assets under management of £8B, has provided startup capital and will raise funds for acquisitions by London-based Oberland. The company was set up this summer by former Value Retail Director William Riordan and former EQT Exeter Director Andrew Dean. Riordan is a longtime lieutenant of Value Retail founder Scott Malkin.

Oberland will look to buy assets in European capitals and second-tier cities that need renovation and an overhaul, from smaller private owners that don’t have the capital to undertake the work necessary. 

It will create a brand and three-star assets positioned to appeal to social-media savvy millennials and younger consumers, who are travelling in record numbers, but don’t have the cash to pay for higher-end hotels. 

Riordan and Dean said that after a slow period at the start of 2022, more buying opportunities are now starting to appear in the hotel sector. 

“There was a theory at the start of Covid that there would be a wave of stock coming onto the hotel market, but a friendly lender environment and government support meant that isn’t happen[ing],” said Riordan, an Oberland co-founder.

“Now owners have eaten through their capital reserves, if the boiler breaks there is no money to fix it,” said Dean, Oberland's other co-founder. “People have been working seven days a week and they’re tired. We’re starting to see people looking to partner with us, and we want to buy assets, put equity in and renovate.”

The fact that the cost of borrowing has risen would also throw up interesting opportunities, Dean said.

The pair said the company is looking to build up a portfolio of assets in the €20M-€30M price bracket, targeting hotels of around 125-150 rooms.

Big European cities like London and Paris would be a focus, but it would also look at interesting, second-tier cities that travellers are increasingly seeking out. Oberland is looking to buy architecturally original buildings to make each of its hotels distinctive, the pair said.

It may buy some assets with Swiss Finance & Property, but is not working with the firm exclusively. Rather than raising a fund, it is buying hotels on a deal-by-deal basis.

The unique nature of the European hotel market offers good potential for the right company and the right brand, Riordan said. 

The planning regimes in historic city centres make building new hotels difficult, meaning renovating older properties is a good entry point. 

And 60% of the hotels in Europe are unbranded, compared to the U.S. and Asia where 80% of the hotels are branded, providing a good opportunity for those that can get the brand right. 

“Millennials and below are the biggest generation of travellers we’ve ever seen, but they only have a small proportion of the wealth in the West compared to previous generations,” Riordan said. “They’re not affluent, but they have standards; they know what cool is, they have it plugged into their brains via social media every day. There are a lot of great four- and five-star brands out there offering experience, but they are out of reach.”

Riordan and Dean said the proposition would involve paring back the rooms, getting rid of the furniture in a hotel room that no one ever uses, and providing rooms that offer a good bed and shower, strong WiFi, and are clean and well-designed. 

On top of that, Oberland’s hotels would have inviting common areas like bars and restaurants, places where guests would want to spend their time. 

“People are looking for something that is authentic, so you need to create something that is linked to its local neighbourhood, and where the locals want to go, too,” Dean said.